Advanced Micro Devices Inc. on Monday said it intends to buy server maker ZT Systems for $4.9 billion in cash and stock to enrich its status as an “ecosystem” partner for companies diving into AI as well as step up competition with rival NVIDIA Corp.
The addition of ZT Systems — whose expertise in compute design and infrastructure for AI and cloud will accelerate deployment of AMD AI rack scale systems with cloud and enterprise customers — will let AMD quickly test and roll out AI graphics processing units for the likes of Microsoft Corp., AMD Chief Executive Lisa Su told Reuters.
“Our acquisition of ZT Systems is the next major step in our long-term AI strategy to deliver leadership training and inferencing solutions that can be rapidly deployed at scale across cloud and enterprise customers,” Su said in a statement. “ZT adds world-class systems design and rack-scale solutions expertise that will significantly strengthen our data center AI systems and customer enablement capabilities.”
AMD cast the acquisition as part of an ongoing enhanced product portfolio to keep up with the AI development of enterprise customers. The complexity of those systems have put a premium on efficiency of compute-rich aspects like AI model training and inferencing, according to AMD.
Upon completion of the deal next year, ZT Systems will become part of AMD’s Data Center Solutions Business Group. ZT Systems CEO Frank Zhang will head the manufacturing business, and ZT President Doug Huang will lead the design and customer enablement teams.
The acquisition of ZT Systems is the latest investment by AMD in software and consulting companies to buttress its AI bona fides in an AI chips market forecast to top $400 billion in late 2027. The chip maker has poured more than $1 billion to expand its AI ecosystem and improve its AI software offerings.
“[AMD] sees a sizable opportunity but has struggled to compete with NVIDIA without certain capabilities that it has been aggressively acquiring,” Futurum Group CEO Daniel Newman says. “From a software perspective, AMD has made significant progress with ROCm, and a series of acquisitions including its most recent Silo AI has added to its capabilities. Also, what has been described as software evolving to higher abstractions for AI software development (PyTorch, Jax, etc.) could be an advantage, but this has been more speculative than reflective in numbers to date.”
Last month, Su said AMD expects to rake in about $4.5 billion in AI chip sales in 2024 from customers such as Meta Platforms Inc. and Microsoft Corp.
The 2,500-person ZT Systems, which was founded in 1994, has partnered with NVIDIA and Intel Corp. on servers for storage, GPUs, 5G, edge computing and other areas.
AMD shares climbed 4.5% in regular trading Monday.
